A third-party arbitrator is typically used to settle disciplinary disputes between officers and their municipal employers. These arbitrators are often lawyers, former judges or other individuals with specialized expertise in labor law. They are tasked with resolving legal and factual disputes regarding the justification and scope of the discipline levied by an employer. In the case of public safety officers in Michigan, an arbitrator’s decision is binding and must be followed by the parties. Arbitrators ordinarily have the power to modify or overrule disciplinary action.
Of the 25 contracts examined, none provided an alternative to binding arbitration as the final stage of a disciplinary appeal. Nor did any contain an “at will” employment clause, which would provide employers with the discretion to discipline employees how they see fit. Three of the contracts, however, either applied binding arbitration only to certain types of disciplinary actions or were unclear about the scope of what discipline could be arbitrated.[*]
The intent of resolving disputes via arbitration is to obtain faster results than could be achieved through litigation. Studies examining the effectiveness of arbitration have concluded that this arbitration appears to meet this goal, suggesting it is about twice as fast as litigation. One study published in the Rutgers University Law Review reported that arbitration typically settles labor disputes in half the time litigation does.[8]
It also appears that arbitration is less expensive than litigation. Nine out of 10 respondents to surveys of those who have participated in arbitration said so.[9] That is not to say that arbitration is not costly. Usually, one or both of the parties in arbitration chooses to be represented by an attorney, and the legal preparation needed for arbitration is not significantly different than that required for litigation. Further, arbitrators charge an additional fee for their time, often more than $1,000 per day, plus expenses.[10] Nevertheless, when compared to the expense of trial, arbitration tends to be less costly.
Even assuming arbitration is meaningfully faster and less expensive than litigation, another question remains: Does arbitration produce fair results? Particularly in the context of binding arbitration for police officers, a poor decision by an arbitrator can lead to a troubled officer returning to duty. In extreme cases, that decision could pose a threat to the public’s safety. To the extent there are savings inherent in arbitration, they must not be outweighed by the risks posed by unreasonable arbitration decisions.
One way to review the reliability of arbitration decisions is to examine their statistical outcomes. Some studies that evaluated these decisions have found that employees win their discipline challenges 52% of the time, suggesting only a slight pro-employee bias.[11] But the issue is highly jurisdictional. For example, in Minnesota, where Derek Chauvin worked as a police officer, unions got 46% of all terminations, the most severe disciplinary action, overturned by arbitrators.[12]
What is clearer is that binding arbitration can result in patently unreasonable decisions, many of which do not become well known. A law review article in the Journal of Criminal Law and Criminology provides several examples, including:
These are far from the only examples of arbitration leading to apparently unjust results. As the law review article stated, “These cases are exceptional, not because the police chiefs’ decisions were overturned, but because the arbitrators’ decisions became publicly known and attracted wide attention.”[13]
These cases are not extreme outliers, nor are they particularly rare.[†] In the events following George Floyd’s death, media outlets uncovered Minnesota officers who had been “fired for kicking an unarmed suspect who was already on the ground being attacked by a police dog,” “for repeatedly punching a handcuffed, intoxicated man in the face,” and for “failing to write up nearly four dozen cases, copying a judge’s signature onto search warrants and lying during the investigation.” All were reinstated through arbitration.[14]
Although it is difficult to identify a single cause that would create these results, at least some blame can be laid at the feet of the incentive structure created by the process for selecting an arbitrator. Commonly, arbitrators are chosen from a single list from which both employers and unions can strike names.[15] Employers and unions commonly conduct background research into arbitrators in an effort to determine which arbitrator would be most favorable to their position. As a result, arbitrators have some incentive to maintain a roughly even record to ensure future business. As stated above, binding arbitration has a roughly even distribution of pro-employer and pro-employee outcomes, but whether that reflects an even-handed treatment of each case or a perverse incentive structure at work, is still an open question.[16]
The incentive to maintain a roughly even record is particularly concerning considering the incentives applicable to employers. Employers know that questionable disciplinary action is likely to be challenged and are generally careful to only hand out discipline that is likely to be upheld. If an employer’s decision to issue discipline is consistent with its incentives, it would suggest that arbitrators are regularly overturning discipline that employers believe is well-supported by evidence. This may be why it is not uncommon for arbitrator decisions to be overly lenient towards officers whose actions appear to warrant stricter discipline, such as in the examples previously mentioned. The alternative explanation is that employers are routinely wasting resources in frivolous and inappropriate attempts at disciplining their employees, which seems unlikely.
Litigation, while slower and more expensive, largely avoids these incentive problems. Judges, whether elected or appointed, are not selected by the litigants before them. Further, judges’ compensation is not directly paid by the parties, and the likelihood of future cases being brought before them does not factor into a judge’s decision-making process. In addition, fees are typically either paid by the parties, or by the loser of the lawsuit, thereby removing incentives for unions to bring questionable challenges, while still allowing for meritorious challenges to advance. For these reasons, if a recourse is offered after discipline is affirmed by a public employer, litigation creates a better incentive structure than arbitration.
Alternatively, jurisdictions that prefer the speed and cost effectiveness associated with arbitration could continue to arbitrate, but with greater limitations on the arbitrator’s powers. The Grand Rapids Officers and Sergeants’ union contract provides a limited example. It holds that if an officer has provided false information during a hearing, an arbitrator’s powers are expressly limited to a determination of the facts. If the facts are validated, the arbitrator has no power to alter the discipline imposed. It reads:
When an employee provides false information during a … hearing which pertains materially to the nature of the complaint being investigated, the parties agree that such violation shall be considered proper cause for summary discharge. In such cases, the arbitrator shall be limited to a determination of facts only and shall have no authority to modify the discipline imposed if the facts support the violation.
If this provision were expanded to all disciplinary matters, rather than just those involving false information, it would mitigate many of the issues currently associated with arbitration. This approach would restore greater authority to police departments to punish bad actors without having to worry that they will be later second guessed by an arbitrator without a full understanding of the officer’s job and performance history.
Binding arbitration creates significantly more problems than would appear at first glance. Despite this, it is widespread to the point of being the default practice embedded in almost all collective bargaining agreements. Jurisdictions that bargain with police officers should either stop negotiating contracts requiring binding arbitration, or, at the very least, significantly limit an arbitrator’s ability to review or overturn discipline.
[*] These are Midland (Command), West Bloomfield and Wyoming.
[†] Additional examples, and a detailed discussion of the issues involved with the discipline and discharge of public employees can be found in Laura J. Cooper, “Discipline and Discharge of Public-Sector Employees: An Empirical Study of Arbitration Awards,” ABA Journal of Labor and Employment Law, vol. 95 (2012), https://perma.cc/6LPD-T4HV.